Little known fact, which bears repeating: We in the northeast USA are under a cap-and-trade program right now — the Regional Greenhouse Gas Initiative. It has put an ever-increasing price on carbon emission, and spreads the proceeds around to conservation measures, like the terrific MassSave program, which gives big incentives to get your house insulated, sealed-up, and otherwise energy-efficient. (I’ve taken advantage of it personally — they subsidize 75% of insulation work, up to a cap of $2000. It’s a big savings and makes the house more comfortable. What’s not to like?)

And the program has been good for the economy. And why not? The local insulation contractors benefit, obviously; and then the money you’re not spending on oil, gas, or electricity goes into your pocket. Better to take the family out to dinner, bringing that money into the local economy, than to have it go up the chimney.

Well, apparently there are plans to weaken the program — or at least to set goals lower than they could be:

But the future effectiveness of this market-based cap-and-trade system, the first but not the only one of its kind in the nation, is now in question. The nine states in the initiative are preparing to reset the emissions cap — or the total amount of carbon dioxide that power plants can emit — and some of the proposals would allow power plants to increase the amount of carbon dioxide they dump into the atmosphere.

Cap-and-trade programs are designed to lower emissions gradually by reducing the cap and the allowances that are available. Polluters get flexibility in cutting emissions by being able to trade allowances among themselves. The idea is to achieve the reductions at the lowest cost through market forces rather than through direct regulation.

But of the four cap-adjustment proposals under consideration, three would reset the cap above current emissions and allow pollution to rise through 2020. Only a fourth option would continue to drive down pollution by resetting the cap at 91 million tons, the current emissions level, and then reducing it by another 2.5 percent a year through 2020.

Part of this is because of the low price of natural gas — the good news side of the revolution, with the manifest ugliness of fracking being the bad side.

In any event, now is absolutely not the time to back off on carbon pollution, which is a direct threat to … well, everyone on the planet, but certainly those of us who live near the ocean and in the line of hurricanes.

Gov. Patrick needs to lead, loudly and firmly, on strengthening RGGI. Hell, get Christie involved — he might take a call these days. This is a success story. Let’s build on it.

Discuss

First of all, I read the article and asked around at work — and *nobody* has any source for these so-called “four plans”. We’re hired to attend meetings like this, and we can’t figure out the claim. Not stating that it’s not true, but I’d like a second source. What *is* true is that RGGi has done studies to measure the effects of both CO2 and electricity rates on a broad spectrum of cap levels.

Secondly, because natural gas is so cheap, because most New England states have pushed strong (and cost effective) energy efficiency programs, because the economy has been weak, and because there is little new-home construction in New England as compared to the southeast and southwest and west coast, the actual cap right now is too high — the market is choosing an electricity generation portfolio which doesn’t even get to the cap. Since natural gas is displacing coal, CO2 is down. Since demand is flat or even shrinking a bit, CO2 is down. Since wind and solar and biomass and imported hydro from Quebec are up, CO2 is down.

Thirdly, that doesn’t mean that RGGI isn’t generating money. Each state is free to spend it how they choose. The New England states, by and large, spend it on some combination of energy efficiency programs, new renewable generation subsidies, and assistance for the poor and elderly. New York has done that too, but also used a chunk for their general budget. Christie in New Jersey took the vast majority of RGGI money, used it to help cut taxes, and then had the audacity to complain that RGGI just increases prices with no benefit to New Jerseans. To make matters worse, because in New Jersey the power plants aren’t owned by the electric companies and they bid in their prices 3 years in advance, the power plants had *included* the cost of the RGGI permits in their bids, New Jersey agreed to pay, and then New Jersey left RGGI and let the generators keep the additional revenue!

Fourthly, sure, call Christie. He isn’t going to play ball. Wait until he (maybe) loses in the next election cycle, then try to get NJ back in.

Fifthly, here’s the pisser: the RGGI states are
Maine
New Hampshire
Vermont
Rhode Island
Connecticut
New York
Delaware
Maryland
(and no longer New Jersey).
Here’s the pisser. Including NJ, those states have about 51 million people. Pennsylvania (the geographically obvious next expansion choice) has 12.7 million people. Pennsylvania electricity generation emits more CO2 than all those other states combined.

So yes, we should ratchet down the cap, to help reduce our CO2 output and use the revenue to implement energy efficiency and renewable energy policies so that we can continue to ratchet down the limit without increasing electricity rates too much. And yes, we should try to get New Jersey to come back to RGGI. But what we really need is cap and trade [with an appropriate cap] for Pennsylvania, Ohio, Indiana, Illinois, Virginia, West Virginia, Kentucky, and so forth. In the mean time — got any other source or reference about these four plans?

The reason the prices are down is due to an awesome year for solar power production in 2012, where the supply of SRECs outpaced demand, which is set by law based on prior year’s solar production. 2010 was a poor year for solar power production, with the SREC program just beginning and comparatively little solar capacity installed state wide.

But SRECs trading at a high price changed all that, and in the next 2 years over 100 megawatts of capacity came online. A lot of commercial projects got pushed out while the Treasury 1603 grant program was available from the federal government – that program gave commercial enterprises a 30% “grant in lieu of tax credit” if they installed solar panels. Many businesses have little to no federal tax burden, so a federal tax credit does them no good – but a check for 30% of their system cost made the investment a no-brainer. That program ended on 12/31/2011, but its effects were felt well into 2012 as a lot of new commercial sites were completed and brought online.

So 2012 was a banner year for solar power production, and the SREC price plummeted from a high of $540 at the end of 2011 to as low as $199 last fall. The demand numbers for 2013 are expected to be low as well, but they’re being reviewed on Beacon Hill and there may be some action taken to beef it up.

Currently, when you install solar power, you get SRECs for ten years – that may be decreased after the last chance auction this July. It’s time to install solar, right now – if anyone wants a free site evaluation and quote, email me, john (at) tehans (dot) com!